Friday, November 30, 2012

Barclays has made as much as half a billion pounds in two years from speculating on food staples such as wheat and soya, prompting allegations that banks are profiting handsomely from the global food crisis.
Barclays is the UK bank with the greatest involvement in food commodity trading and is one of the three biggest global players, along with the US banking giants Goldman Sachs and Morgan Stanley, research from the World Development Movement points out.
Last week the trading giant Glencore was attacked for describing the global food crisis and price rises as a "good" business opportunity.
The extent of Barclays' involvement in food speculation comes to light as new figures from the World Bank show that global food prices hit an all-time high in July, with poor harvests in the US and Russia pushing up the average worldwide cost of staples by an unprecedented 10 per cent in a month.
The extent of just one bank's involvement in agricultural markets will add to concerns that food speculation could help push basic prices so high that they trigger a wave of riots in the world's poorest countries, as staples drift out of their populations' reach.
Nor has the UK escaped rising food costs. Shop food prices have risen, on average, by 37.9 per cent in the past seven years, according to the Office for National Statistics, as the demands of an increasingly affluent and growing world population strain supply. Oils and fats have soared by 63 per cent in the UK during that period, fish prices by 50.9 per cent, bread and cereals by 36.7 per cent, meat 34.5 per cent and vegetables 41.3 per cent. In April, average UK food prices were 4.2 per cent higher than a year earlier.
Oxfam's private sector adviser, Rob Nash, said: "The food market is becoming a playground for investors rather than a market place for farmers. The trend of big investors betting on food prices is transforming food into a financial asset while exacerbating the risk of price spikes that hit the poor hardest."
The World Development Movement report estimates that Barclays made as much as £529m from its "food speculative activities" in 2010 and 2011. Barclays made up to £340m from food speculation in 2010, as the prices of agricultural commodities such as corn, wheat and soya were rising. The following year, the bank made a smaller sum – of up to £189m – as prices fell, WDM said.
The revenues that Barclays and other banks make from trading in everything from wheat and corn to coffee and cocoa, are expected to increase this year, with prices once again on the rise. Corn prices have risen by 45 per cent since the start of June, with wheat jumping by 30 per cent.
Barclays makes most of its "food-speculation" revenues by setting up and managing commodity funds that invest money from pension funds, insurance companies and wealthy individuals in a variety of agricultural products in return for fees and commissions. The bank claims not to invest its own money in such commodities.
Since deregulation allowed the creation of such funds in 2000, institutions such as Barclays have collectively channelled an astonishing $200bn (£126bn) of investment cash into agricultural commodities, according to the US Commodity Futures Trading Commission.
Barclays' dominance in commodities trading is thanks to its former chief executive Bob Diamond, who was Britain's best-paid banking boss until he was forced to resign last month following a £290m fine for attempting to manipulate the Liborinterest rate. As boss of Barclays Capital he boosted trading in agricultural products.
Dealing with the reputational headache associated with high levels of food speculation will be yet another item in the already-bulging in-tray of Antony Jenkins, who was promoted to become Mr Diamond's replacement on Thursday.
Christine Haigh, policy and campaigns officer at the World Development Movement and one of the analysts behind the research, said: "No doubt the UK's biggest player in the commodities markets is hoping it will do better this year by cashing in on rising food prices. "Its behaviour risks fuelling a speculative bubble and contributing to hunger and poverty for millions of the world's poorest people."
Banks and hedge funds typically argue that speculation makes little or no difference to food prices and volatility and argue, correctly, that no definitive link has been proved. Barclays declined to comment on the amount of money it makes from trading in agricultural commodities yesterday.
The bank defended its actions, pointing out that trading in so-called futures contracts – an agreement to buy or sell a certain quantity of a product, at a given price on an agreed date – helped parties such as farmers and bakers to hedge against the risk of rising or falling prices. "Our clients include investment companies, food producers and consumers who, among other things, seek our help to manage risks."
Barclays also declined to comment on whether it thought large amounts of speculation pushed up prices and volatility. A spokesman said: "We recognise there is a perception held by some stakeholders that participation in agricultural futures markets by some participants can unduly influence the prices of commodities. As a result, we continue to carefully monitor market trends and any research produced on this subject," a spokesman said."
Barclays Capital analysts admitted in a note to clients in February that speculation did push up prices. Barclays said: "The second key driver is that commodity investors have begun allocating to commodities again after beginning 2012 heavily underexposed to the sector." The other drivers were the "health of the global economy" and "weather and geopolitics".
*******************************EP committee votes to curb food commodity trading to tackle price spikes**************************German banks seem to be losing their appetite for agricultural commodities trading as public opinion turns against the investment vehicles blamed for driving up global food prices.
Catastrophic droughts this summer in the United States and Russia have led to an explosion in global cereal prices, fanning the flames of debate on whether it is ethical for investment banks to make billions of dollars in profits from speculation in food commodities while millions of people are condemned to live — and die — in hunger and poverty.
“By betting on price developments for agricultural commodities, investment banks are driving up food prices. They are accessories to the world’s famine crisis,” the German-based NGO, Foodwatch, says on its website.
“And because the banks are using the money that we invest in life insurance policies and pension funds to gamble in this global commodities casino, it’s a problem that implicates all of us,” the campaign group said.
But the tide of public opinion is turning. And in face of growing pressure, Germany’s second-biggest bank Commerzbank, regional banks LBBW and LBB and the savings bank DekaBank have all announced in recent months that they are pulling out of agricultural commodities trading and ceasing to offer such investment vehicles to their customers.
Deutsche Bank, Germany’s biggest lender and which for most people embodies the German banking system, announced in March that it was shelving a new set of investment products based on basic agricultural goods. Nevertheless, its DWS investment arm would continue to offer existing products, at least for the time being.
“We cannot with a clean conscience advise our clients” on investments in agricultural commodities, said Commerzbank’s chief commodities analyst Eugen Weinberg.
“The media and politicians are currently convinced that these are driving up prices. And even if we do not share that opinion, for the sake of image, we don’t want our products to be associated with speculation,” he said.
German banks are nevertheless still relatively minor players in the agricultural commodities markets in comparison to big investment banks such as Britain’s Barclays or HSBC, insurers and even agricultural companies themselves.
Industrial-scale agricultural producers, for example, use so-called futures contracts to guard themselves against short-term price volatility by fixing prices several months in advance.
“It could actually prove counter-productive to bar banks from investing in agricultural commodities,” warned Thorsten Polleit, former chief economist at Barclays Capital and now chief economist at the precious metals trading group Degussa Goldhandel.
“Agricultural firms would find it difficult to finance their investments” and that would push up prices even more, Polleit argued.
Expert opinion is in fact divided over whether there is a real causal link between agricultural exchanges and rising food prices.
“The majority of studies reach the conclusion that investors aren’t behind price movements per se, but that they reinforce the underlying trends be it up or down,” said Manfred Schoepe, an agricultural specialist at the Ifo economic think tank in Munich.
In the long term, it is other factors that influence agricultural prices, such as global population growth, large-scale changes in nutritional trends or a decline in the amount of cultivatable land, he argued.
German Development Minister Dirk Niebel recently used the controversy of soaring agricultural prices to propose a ban on the sale of the bio-fuel E10, arguing that land used to cultivate it meant there was less land for growing foodstuffs.
In reality, however, E10 was disliked by car drivers because they feared it damaged their car’s engine.

Wednesday, November 28, 2012

Proven model predicts higher food prices if speculation is not reined inThe New England Complex Systems Institute, that has developed a quantitative model able to very closely predicted the FAO’s food price index, released a new report predicting sharply higher food prices due in part to excessive speculation.
Their model, originally released in September 2011 matched the FAO’s
index from 2004 to 2011. Since then it has continued to closely follow
the real world numbers.
Unfortunately, the model now predicts, “another speculative bubble
starting by the end of 2012 and causing food prices to rise even higher
than recent peaks”
While the researchers acknowledge that the drought in the Midwest
U.S. will cause prices to rise, their model shows that excessive
speculative activity will have an even larger effect. Though some key
financial reforms passed in 2010 may finally begin to be implemented in
early 2013, that may be too late to avoid the coming price bubble.
“We find that through the mechanism of speculative activity, the
drought may trigger the third massive price spike to occur earlier than
otherwise expected, beginning immediately, and sooner than could be
prevented by the anticipated new regulations. This spike may raise
prices well beyond an increase justified by the reduced supply caused by
the droughts… [w]hile the drought only causes a limited price shock,
the impact on prices is amplified by the speculative activity,” write
the authors.
As NECSI president Bar-Yam said, “We are on the verge of another crisis,
the third in five years, and likely to be the worst yet, capable of
causing new food riots and turmoil on a par with the Arab Spring,
alluding to another study by the NECSI showing that the last two food
prices bubbles in 2008 and 2011 correlated with similar increases in
violent outbreaks and food riots.
Perhaps most frustrating is that the principal causes of the rising prices are bad public policy:
“Each of these causes is due to particular acts of
government intervention or deregulation. Thus, while the food supply and
prices may be vulnerable to global population increases and
environmental change, the existing price increases are due to specific
governmental policies. In order to prevent further crises in the food
market, we recommended the halting of government support for ethanol
conversion and the reversal of commodities market deregulation, which enables unlimited financial speculation.

Heavy capital investment in existing systems and infrastructures, and rising food prices make it difficult
to break out into new solutions and alternatives. Nestle CEO Peter Brabeck-Letmathe in an October
2010 statement to shareholders explained that high food prices increase the pressure to improve
efficiency, "But when you start only after prices have gone up, you are too late”. In general, as the food
chain extends over distances able to span the globe, waste tends to rise. Local food production for local
consumption is the solution but existing commercial practices, consumer habits and expectations are
major obstacles to change in the absence of government intervention and legislation, which itself is
only likely under crisis conditions.

Holiday Greetings: Food prices on the rise
The U.S. Department of Agriculture Economic Research Service forecasts
grocery prices will increase 3 percent to 4 percent next year, with beef
and veal leading the way. The information was last updated Oct.
25.Dermot Hayes, an ISU economist specializing in commodity markets and
price analysis, thinks the USDA estimate is low. An additional 1 percent
to 2 percent is likely, he said.“I think the USDA is just
watching farm costs. They’re not looking at other costs” like packaging,
trucking and pay and benefit increases, Hayes said.The USDA
predicts increases of 4 percent to 5 percent in beef and veal, 2.5
percent to 3.5 percent for pork, 2.5 percent to 3.5 percent in fresh
fruit and 3 percent to 4 percent for cereal and bakery products, among
other things.Grain supply and demand is the major driver,
officials said. The 2012 corn crop nationwide is pegged at 10.7 billion
bushels, down 13 percent from last year. Soybean production is forecast
at 2.97 billion bushels, down 4 percent from a year ago.Grain
stockpiles have greatly diminished over the years as demand ramped up.
Corn ending stocks for the 2012-13 marketing year are estimated at 647
million bushels, down from 1.1 billion bushels two years ago. Soybean
stocks are projected at 140 million bushels, down from 215 million
bushels in 2010-11.As a result, the USDA estimates average corn
prices during the current marketing year ending next September will be
$6.95 to $8.25 per bushel. The average price in 2010-11 was $5.18.
Soybean prices escalated from an average price of $11.30 per bushel
during the 2010-11 marketing year to an estimated average of $13.90 to
$15.90 this year.Lee Schulz, an ISU Extension livestock
economist, said high feed costs will be reflected at the meat counter.
Schulz recently spoke at an agriculture outlook seminar at Hawkeye
Community College.Farmers nationwide are raising less cattle, hogs and
poultry because of a run of red ink, and will for the near future.

Beef on the Rise
While most were busy focusing on
turkey last week, cattle prices made a move – jumping from $125 to
$128/cwt.Forward cattle contracts for 2013 are averaging $133.50, 8.7
percent above 2012 levels. Both on-feed and off-feed inventories are
tight due to two consecutive drought years. 2012 beef cow slaughter is
3.9 percent below a year ago. Total year-to-date beef output is 1.9
percent below 2011, and 2013 production could be down as much as 4
percent. Both steak and ground beef prices have had double-digit
percentage increases this year and more of the same is expected in 2013.

Households with least access to market-sourced food
are precisely those that must rely on markets to fill their basic food
needs. Food markets tend to fail most often and most severely for those
who need them the most – the hungry poor.
There is considerable evidence that because poor households spend large
shares of their incomes on food and because staples loom large in their
food expenditures, lower prices of staple foods significantly increase
purchasing power and real incomes. Higher real incomes allow greater
purchases of non-staples, leading to substantial short- and long-term
nutritional benefits. Conversely, high prices for staple foods lead to
reduced consumption of nutritious foods, with long-term negative effects
on health, education and productivity.
Most food producers, traders and consumers face a plethora of
trade-impeding constraints, which keep many of them in a hunger–poverty
trap. Their access to credit is severely limited. The costs of obtaining
market information, searching for buyers or sellers, and enforcing
contracts are high. Food trade is risky, personalized and cash-based,
with limited longterm investment by private traders in transport or
storage. Limited and inadequate storage capacity leads to waste and higher pricing.BIO FUELS AND THE RIGHT TO FOOD
Too much attention has been paid to addressing the mismatch between
supply and demand … while comparatively too little attention has been
paid both to the imbalances of power in the food systems and to the
failure to support the ability of small-scale farmers to feed
themselves, their families, and their communities.”
the global community has yet to address the key drivers of recent food
prices, which have spiked three times in the last five years. Those
include:

financial speculation on commodities markets, which are still largely unregulated;

climate change, which continues unchecked with little action on
either mitigation or adaptation for developing country producers;

inadequate public food reserves, which are still widely dismissed as inefficient by global powers;

insufficient investment in and protection of domestic food producers in developing countries (see my report on Mexican maize farmers), which are still battered by imports and undermined by market failures and misplaced donor priorities.

Several issues received priority attention in the Food Crisis report,
and they are the focus of ongoing GDAE research:

Reducing financial speculation on commodities markets
– Reforms have been limited, leaving commodities markets prone to wide
price swings. Proposals to increase the use of food reserves to limit
volatility have been largely rejected.

Limiting the further expansion of crops and land dedicated to biofuels –Government
subsidies, incentives, and mandates spur biofuel expansion in
industrialized countries, contributing to the underlying demand-growth
that drives agricultural prices steadily upward.

Expanding sustainable food production in developing countries
– Yield gaps are largest among smaller scale farmers, and investing in
the sector can close those gaps, improving livelihoods, resource
management, and food production.

Halting “land grabs”
– As food-producing resources become more valuable,
resource-constrained countries and speculative investors have bought or
leased millions of acres of agricultural land in Africa and in other
developing regions, compromising the long-term food-producing capacity
of developing countries.

The United Nations, aid agencies and the British Government have
lined up to attack the world's largest commodities trading company,
Glencore, after it described the current global food crisis and soaring
world prices as a "good" business opportunity.

With the US experiencing a rerun of the drought "Dust Bowl" days of
the 1930s and Russia suffering a similar food crisis that could see
Vladimir Putin's government banning grain exports, the senior economist
of the UN's Food and Agriculture Organisation, Concepcion Calpe, told The Independent: "Private companies like Glencore are playing a game that will make them enormous profits."

Ms
Calpe said leading international politicians and banks expecting
Glencore to back away from trading in potential starvation and hunger in
developing nations for "ethical reasons" would be disappointed.

"This
won't happen," she said. "So now is the time to change the rules and
regulations about how Glencore and other multinationals such as ADM and
Monsanto operate. They know this and have been lobbying heavily around
the world to water down and halt any reform."

Glencore
announced pre-tax global profits of £1.4bn. The G20 is considering
holding an emergency summit on the world food crisis.

Oxfam was
scathing about Glencore's exploitation of volatile world food prices.
Jodie Thorpe, from the aid agency's Grow Campaign, said: "Glencore's
comment that 'high prices and lots of volatility and dislocation' was
'good' gives us a rare glimpse into the little-known world of companies
that dominate the global food system."

A Glencore
spokesperson said: "Regardless of the business environment, Glencore is
helping fulfil global demand by getting the commodities that are needed
to the places that need them most."...yeah, directly into their fucking off shore accounts

So the unwanting soulsees what's hidden,and the ever-wanting soulsees only what it wants

(the above is my weekly commentary that accompanied my sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion, and also includes other links of interest…if you’d be interested in getting my weekly emailing of selected links that accompanies these commentaries, most coming from the aforementioned GGO posts, contact me…)

Thursday, November 22, 2012

Under Mao Zedong, Yang's good fortune was to find a job as a reporter
with China's state-run Xinhua news agency. His misfortune had been to
see his father die of hunger in 1961, at the height of the famine that
killed an estimated 36 million people:
"When my dad died, I thought it was just my family's problem.
I blamed myself because I hadn't gone back home to pick wild plants to
feed my dad. Later on, the governor of Hubei province said millions of
people had died. I was astonished," Yang says.
In the 1990s Yang, by now a senior editor at Xinhua, used his
status to secretly research the truth about the famine in 12 different
provincial archives:
"I could not say I was looking for data about the famine, I
could only say I was looking for data about the history of China's
agriculture policy. In the data, I found a lot of information about the
famine, and people who starved from it. Some of the libraries allowed me
to take photocopies; some only let me write the information down.
These," he gestures casually at a teetering pile of brown envelopes on
the floor, "are the photocopies".

The result was Tombstone: The Untold Story of Mao's Great Famine, published in the West this year to high acclaim.
Yang, aged 72, is neat, small, swaddled in two jumpers
despite the shafts of winter sunlight that stream across his desk. He is
rummaging through his shelves on the hunt for a book whose title is
important: by a Western author whose name has slipped his mind.
"Something about slavery?" he says. I try the name Hayek and
after a bit of transliteration it works. He had stumbled on Friedrich
von Hayek's The Road to Serfdom in a library and chuckles with mild scepticism when I tell him it is probably the most influential book in Western economics:
"Before I read Hayek, I had only read works the party wanted
me to. Hayek says that to use the state to promote a utopia is very
dangerous. In China that's exactly what they did. The utopia promoted by
Marx, even though it is beautiful, it is very dangerous."
Even now, 50 years on, Chinese official history insists the
famine of 1958-61 was a natural disaster. Yang's work demonstrates the
famine's massive scale and its direct, political causes.
Agriculture was brutally collectivised, leaving peasants
dependent on centrally distributed grain. Local cadres ordered the
forced pooling of family kitchens, confiscating all ladles and punishing
those who kept private food supplies.
Then, as Mao ordered rapid industrialisation during the Great Leap Forward,
the grain supplies disappeared. Simultaneously local officials,
terrified of failure, began to report fictional bumper harvests. Mao,
meanwhile, publicly humiliated any party leader who voiced doubts. The
result was the greatest famine in modern history.
It is Yang's refusal to duck the parallels with today that
make his book unpublishable in mainland China. The famine happened
because the party was all-powerful, he argues - just as numerous
disasters visited on China by today's leaders - from the HIV-infected blood selling scandal, to the spread of Sars, to the shoddy buildings that collapsed during the Sichuan earthquake - are the result of unfree politics and an unfree press.
Despite its samizdat status, Yang thinks there may be around
half a million copies of the Hong Kong edition circulating in China. His
own copy, discreetly kept in a cupboard, is a black-market version of
the latter: its pages are photocopied, its binding stiff, shiny and
amateur.

"We learn a lot about history.
However, most of it is fake. It is full of made up stories to meet the
needs of ideology. Once you realise you've been cheated, you'll begin to
pursue the truth. ” Yang Jisheng

"It is estimated that there are about 100,000 of these
knock off copies in circulation," he says. "People try to bring the real
ones from Hong Kong but they get confiscated, so they make these. The
response is very strong, I have received lots of letters from readers
telling me the stories of relatives who died from the famine."
The English language version has made a massive impact, with some calling Yang the Chinese Solzhenitsyn. To me, however, he seems more like the Chinese equivalent of Vasily Grossman:
though he believes Marxism is a dangerous fantasy he remains a party
member. His haunting prose - like Grossman's - defends the power of
memory:
"China has undergone an enormous transformation. But… the
abuses under the exclusive profit orientation of a market economy and
the untrammelled power of totalitarianism have created an endless supply
of injustice, exacerbating discontent among the lower class majority.
In this new century I believe that rulers and ordinary citizens alike
know in their hearts that the totalitarian system has reached its end."
(Tombstone, p22)
What is it like, I ask, to be an historian in a country where historical memory is so completely suppressed?
"Very painful," he says. "We learn a lot about history.
However, most of it is fake. It is full of made-up stories to meet the
needs of ideology. Once you realise you've been cheated, you'll begin to
pursue the truth. That's what I did: I've been cheated, so I want to
write the truth - however risky it is."
Though retired from Xinhua, Yang is still active. The small
political magazine he runs out of this tiny office seems, from piles of
unsold copies stacked up in the corridors, not massively influential. He
thinks it will take 10 years to publish Tombstone in the People's
Republic, if the political reform process keeps to its current glacial
pace.
But like all dissident writers in China, he has learned not to hurry.
He pinches green tea leaves for me into a paper cup, and
pours hot water from a flask. There is a barely-touched and ancient
computer in one corner of the room, but Yang's conquest has been made in
the world of analogue information: photocopies and scribbled notes.
He pats the English edition contentedly, still stunned by the price the publishers Penguin are charging for each one:
"Tombstone has four layers of meaning. The first is for my
father who died in the famine, another is to remember the 36 million
people who died during the famine. The third layer is a tombstone for
the system that killed them."
And the fourth?
"The fourth is - the book has put me at political risk, so
it's a tombstone for myself if anything happens to me because of writing
it."

Wednesday, November 21, 2012

U.S.
food banks raise alarm as drought dents government supplies
(Reuters) - The worst U.S. drought in more than half a century has weakened the
safety net for the 50 million Americans who struggle to get enough to eat, and
the nation's food banks are raising the alarm as the holiday season gets into
full swing.
Demand for food assistance - unrelenting as the U.S. economy slowly recovers
from the worst recession since the Great Depression - ticks higher during the
winter holidays.This summer's crop-damaging weather in the U.S. farm belt has driven up costs
for everything from grain to beef. That means higher prices at the grocery
store, but it also means the U.S. government has less need to buy key staples
like meat, peanut butter, rice and canned fruits and vegetables to support
agricultural prices and remove surpluses.
Most of the products from those government purchases are sent to U.S. food
banks, which then distribute them to food pantries, soup kitchens and emergency
shelters that are a lifeline for people who struggle with hunger - including
low-income families, senior citizens and people with disabilities.
The decline in government donations is exacerbating the pain inflicted by
stubbornly high unemployment and a lack of income growth for many low-wage
workers."People have been coping with economic distress for a really, really, really
long time ... After several years of tapping all the resources we have, we're
starting to see that we're coming up short," said Carrie Calvert, director of
tax and commodity policy at Feeding America, the nation's largest hunger relief
organization.

ORStart a local Blessings in a Backpack group. Contact Blessings in a Backpack
(1-800-USA-4FOOD) for materials and info on how to get started in your
community. Then research local schools with free/reduced price meal
programs, and identify local supporters to raise funds to help buy food
at a discount. Just $80 provides one child with backpacks full of food
for a year! Once you have your volunteers and funds, call Blessings and
they'll help you set up your program.

OR Donate to food banks. If you can't spare the time to start a program, donate directly to Blessings, your local community food bank, or Feeding America,
the national umbrella group of food banks. Donating canned goods is
helpful, but money is even more so, says Berg. "These groups can buy
food at a discount, so where you can buy one can of food with your
dollar, they can buy three."

Tuesday, November 20, 2012

“When I give food to the poor, they call me a saint. When I ask why the poor have no food, they call me a communist.”

Helder Camara

The Root of the Problem by Eric Holt-GimnezThe food crisis is a symptom of a food system in crisis. Bad weather, high oil prices, agrofuels, and speculation are only the proximate causes of a deeper, systemic problem. The root cause of the crisis is a global food system that is highly vulnerable to economic and environmental shock. This vulnerability springs from the risks, inequities, and externalies inherent in food systems that are dominated by a global industrial agri-foods complex. Built over the past half-century—largely with public funds for grain subsidies, foreign aid, and international agricultural development—the industrial agri-foods complex is made up of multinational grain traders, giant seed, chemical, and fertilizer corporations, processors, and global supermarket chains. The Green Revolution (1960-90) was a campaign led by the international agricultural research centers that aimed to modernize farming in the developing world. Impressive gains in national productivity were accompanied by the steady monopolization of seed and input markets by northern corporations. The highly celebrated Asian and Mexican "miracles" masked the loss of 90% of agro-biodiversity, the massive reduction of water tables, salinization and erosion of soils, and the displacement of millions of peasants to fragile hillsides, shrinking forests, and urban slums. Excluding China, the Green Revolution increased food per capita by 11%. However, the number of hungry people also increased by 11%.Structural Adjustment Programs (SAPs) of the 1980s-90s imposed by the World Bank and the International Monetary Fund followed, dismantling marketing boards, eliminating price guarantees, closing entire research and extension systems, breaking down tariffs, and deregulating agricultural markets. Southern countries were flooded with subsidized grain from the U.S. and Europe that was sold at prices far under the costs of production. This destroyed national agricultural markets and tied southern food security to global markets dominated by rich northern countries.

"The idea that developing countries should feed themselves is an anachronism from a bygone era. They could better ensure their food security by relying on U.S. agricultural products, which are available, in most cases at lower cost."

U.S. Agriculture Secretary John Block, 1986

The rules of the World Trade Organization (WTO) cemented the policies of the Structural Adjustment Programs in international treaties that overrode national laws. WTO rules, like the Agreement on Trade-Related Aspects of Intellectual Property Rights and the General Agreement on Trade in Services, further consolidated northern control over southern agricultural economies. The global South was forced to strip away genuine protections for smallholders and local producers to open its markets to northern goods while northern markets remained largely protected through a combination of both tariff and non-tariff barriers. Regional free trade agreements such as NAFTA and CAFTA, pushed through by the North, continued trade liberalization, forcing southern farmers out of business and making countries of the South dependent on northern food imports.World food aid in 2007 reached its lowest level since 1961 (5.9 million tons), precisely when more people than ever are going hungry. Why? Because when prices are high—and food is unavailable to the poor—food aid decreases. When prices are low—and food is abundant—food aid increases. Sound backward? That is because food aid responds to grain prices on the international market—not to the food needs of poor countries. When the price of cereals is low, northern countries and transnational grain companies seek to sell their commodities through food aid programs. When the price is high, they prefer to sell their grains on the international market. When more people suffer from hunger, less food aid arrives. Global food aid is dominated by U.S. food aid, whose objective since 1954 has been to "lay the basis for a permanent expansion of our exports of agricultural products with lasting benefits to ourselves and peoples of other lands."Food banks: canaries in the mineshaftPrices are up, but just how bad is the food crisis in the United States? The recent trends in the nation's food banks are a good indicator: there is less food available, it is more expensive, and the lines outside the food banks are growing. Federal support for food banks began during the food crisis of the 1970s as an emergency anti-poverty measure to close what was thought to be a temporary food security gap. In the 1980s, despite a downturn in the economy, the Reagan administration cut support for social safety nets, pushing poor people into the street and forcing food banks to turn to the private sector for donations. Food banks fought hunger by collecting unwanted food from distributors and individual households. Religious institutions, nonprofits, and an army of volunteers set up soup kitchens, food pantries, and food banks, giving rise to a rapidly growing emergency food movement. Between 1980 and 1982, the Salvation Army's food pantry's demand increased 400%. As the number of hungry people in the United States has grown, food banks have increasingly taken up the slack where government food stamps and federal school and nutrition programs leave off. Today, the nation's largest food bank, Feeding America (formerly Second Harvest), distributes two billion pounds of food annually to 200 national food banks. A survey done by Feeding America in 2008 revealed that 99% of food banks have witnessed a significant increase in the number of people served since last year. Though the demand for food has increased, food stocks are down. USDA surplus has declined by $200 million and local food donations are down nationally about 9%. (The USDA distributes surplus when stocks are high or commodities prices fall below a certain level. Like international food aid, they respond to the needs of the grain market first, tending to decrease distribution when food is most needed and increase it when it is less needed.) The Food Bank Association of New York state reports that USDA commodities are down 60% this year, a decline of 67 million pounds of food. Because many food banks across the nation rely heavily on government surplus, the decline in USDA bonus commodities has pressured them to find alternative suppliers and sources of food. Many food banks are making substitutions for traditional sources of protein and dairy, and others are reorganizing their operating structures. The California Association of Food Banks asserts that food banks are at the "beginning of a crisis." The concerns of food banks in California are not isolated; strain and worry resounds throughout the food bank community, as they cope with the food crisis. Food Banks are also suffering due to decreased monetary donations from middle class Americans who are tightening their belts in response to the national financial crunch, and decreased food donations from food corporations due to the emergence of lucrative "secondary markets" (e.g., Big Lots, Dollar Tree, Grocery Outlet). Food crises and farm crises are never far apart. In the 1970s, the government had been managing grain supply and market fluctuations by maintaining national reserves and paying farmers to idle their land. But when oil shortages and inflation pushed up food prices—provoking widespread hunger abroad—then U.S. Secretary of Agriculture Earl Butz told U.S. farmers to save the world from hunger by planting "fence row to fence row" and putting their entire harvest on the market. Policies that curbed overproduction and protected farmers from price swings were replaced by ones that encouraged maximum production and low prices. When it turned out the hungry people of the world were too poor to buy all the food U.S. farmers produced, prices fell. Secretary Butz then told farmers to "get big or get out." The result was widespread bankruptcy and the painful exodus of over half of our farming families from the countryside. The average farm size went from 200 to 400 acres, reflecting a steady agrarian shift to mega-farms. Large-scale corporate and non-family farms now control 75% of agricultural production. Under new agricultural policy, farmers were guaranteed a minimum price for their grain. True to its word, over the next two decades, the government paid out billions of dollars to maintain surpluses of cheap grain. Cheap grain became the bulwark not only of the feedlot explosion, but of U.S. foreign policy as well. This policy was later incorporated into the rules of the WTO that prevented developing countries from raising tariffs to protect their agriculture from cheap foreign imports. But membership in the WTO also required the United States to drop its farm subsidies. The 1996 Farm Bill called for a phase-out by 2001. The so-called "Freedom to Farm" Act abandoned our national grain reserves and gutted the positive, New Deal aspects of the U.S. Farm Bill (like price floors to rural economies, conservation, and diversified livestock programs). Counting on unimpeded exports, U.S. farmers borrowed heavily to crank up production—too quickly, as it turned out. When global grain prices crashed, the government responded with billions of dollars in "emergency payments" that they claimed were "not technically" subsidies. In 2002 corn and wheat exports from the United States were priced at 13-43% below the cost of production. It is no surprise that these "non-subsidies" became the foundation of the 2002 Farm Bill.Food, finance and speculation: bailing our way out of crises? The main beneficiaries of these policies were large farms, multinational grain traders including Cargill and Archer Daniels Midland, the feedlot industries (e.g., Tyson and Smithfield), and chemical-seed companies including Monsanto, DuPont, and Syngenta.

"The current financial crisis might be mitigated by going to the Federal Reserve Bank and the U.S. government to tap capital reserves. But what happens if we have a devastating drought or other natural or man-made disaster which results in a food crisis in the United States? There are no food reserves! The United States has a Federal Reserve Bank for money, and a Strategic Petroleum Reserve for oil, but absolutely no federal reserve for grain and other emergency foodstuffs." Larry Matlack, American Agricultural Movement

16 percent of DC residents (approximately one in 6) are food insecure. Among children under the age of 18, the rate of food insecurity climbs to 32 percent (or one in three children). (USDA via Feeding America, 2010).For senior citizens, as many as 40 percent are at risk of hunger. (Hunger in America, Mathematica Policy Research, 2010)

31 percent of children in the District of Columbia live below the federal poverty line, a six percentage point increase since 2007. (US Census, 2011)

The average monthly food stamp benefit for individuals in the District is $141.68, and for families, amounts to $251.12. (USDA FNS 2011)

For many families, especially those in the lower income Wards 7 and 8, access to supermarkets with nutritious food options is limited. (DC Healthy Corner Store Report, DC Hunger Solutions, 2008)

Food stamps last, on average, 2 ½ weeks. 70 percent of clients served report that food purchased with food stamps does not last and they do not have money to buy more (Hunger in America 2010, Mathematica Policy Research)

In 2011, households with children reported food insecurity at a significantly higher rate than those without children, 20.6 percent compared to 12.2percent.

In 2011, households that had higher rates of food insecurity than the national average included households with children (20.6 percent), especially households with children headed by single women (36.8 percent) or single men (24.9 percent), Black non-Hispanic households (25.1 percent) and Hispanic households (26.2 percent).

In 2011, 8.8 percent of seniors living alone (1 million households) were food insecure.

Food insecurity exists in every county in America, ranging from a low of 5 percent in Steele County, ND to a high of 37 percent in Holmes County, MS.v

Seven states exhibited statistically significant higher household food insecurity rates than the U.S. national average 2009-2011:iv

The past few years have seen a rapid rise in real food prices – especially, fruit, vegetables and meat. At the same time, we have seen falling real incomes for low income decile groups. The consequence is that those on low incomes have been changing their diet in response to higher prices. With squeezed real incomes, there has been a greater preference for ‘cheap calories’ and lower demand for ‘more expensive calories’ – such as fruit and vegetables. Some fear the poorest are struggling to buy sufficient food.Income Decline for Low Income Groups

Median income after housing costs fell 12% between 2002-03 and 2010-11 for low income deciles households – while rising in all other income groups.
Food prices have risen 12% in real terms over the last five years taking us back to 1997 in terms of cost of food relative to other goods.Food Price Inflation Relative to CPI Inflation

How did changes in food prices affect demand for different food groups?

Fruit saw the second largest increase in price (35% and also the second largest fall in demand (-25%). This suggests that fruit is highly sensitive to changes in price and income. It is hard to separate the income and price effect because we have seen falling incomes and rising prices at the same time. But, it suggests demand for fruit is price elastic – people don’t see it as a necessity, – they can substitute other types of food. It may also be a ‘luxury good’ – a good with an income elasticity of demand. This means falling incomes cause a bigger percentage fall in demand.

In England in 2010 obesity rates increased in all age bands with adults aged 25-34 showing the largest rise at 36%.

Such hunger is not due to a shortage of food – globally there is enough to go round and if (a big if) we make the right decisions now, we can continue to feed the world despite population growth and climate change. By some estimates, stopping the waste of food after harvest due to poor storage or transport infrastructure, and then in our own kitchens, could free up half of all food grown. The number of overweight and obese people in the world, suffering their own health problems, including a sharp rise in heart disease and diabetes, is roughly equal to the number of hungry people. That highlights one of the underlying causes of hunger – extreme levels of inequality, both within and between countries.

It requires action at several different levels. At a national level, progressive governments in Brazil and Ghana have shown how to cut hunger sharply, through cash transfers to poor people, raising the minimum wage and investing in smallholder farmers (especially women), who both produce food, and are some of the poorest and hungriest people in the Alice in Wonderland world of a brutally unfair farming system.

Beyond supporting aid for food and agricultural investment, what else can we in the well-fed countries do? Start by putting our own house in order. The rich countries are part of both the solution and the problem. Europe and America's push to reduce their dependence on imported oil and gas has led them to introduce targets and subsidies for biofuels, but these compete directly with food production, forcing up prices for poor people. Rich country greenhouse gas emissions are driving climate change at a pace that outstrips even the most pessimistic projections of the climate modellers, and there are few signs of governments agreeing (still less achieving) the kinds of reductions needed to avoid catastrophic temperature rises that will particularly harm tropical agriculture. We urgently need an international effort to find a way to feed the planet's growing population without destroying its ecosystems, yet current investments are feeble.

Hunger is both a cause and a symptom of poverty. Damaged bodies and brains are a moral scandal and a tragic waste of economic potential. That hunger exists at all shows the urgency of redistributing income and assets to achieve a fairer world. Providing the additional calories needed by the 13% of the world's population facing hunger would require just 1% of the current global food supply. That that redistribution has not already taken place is truly something to be ashamed of.

note on the graphs used here

in March a year ago the St Louis Fed, home to the FRED graphs, changed their graphs to an interactive format, which apparently necessitated eliminating some of the incompatible options which we had used in creating our static graphs before then...as a result, many of the FRED graphs we've included on this website previous to that date, all of which were all created and stored at the FRED site and which we'd always hyperlinked back there, were reformatted, which in many cases changed our bar graphs to line graphs, and some cases rendered them unreadable... however, you can still click the text links we've always used in referring to them to view versions of our graphs as interactive graphs on the FRED site, or in the case where an older graph has gone missing, click on the blank space where it had been in order to view it in the new format....